Advisories

Court Denies Attorneys’ Fees To Both Parties In Case Where Underlying Dispute Had Been Settled

In Becker v. WP Owners Corp., Index No. 701678/2013 (Sup. Ct. Queens Co. Jan. 10, 2014), the tenant-shareholders of a cooperative apartment sued the cooperative for a declaratory judgment that the Cooperative was not entitled to terminate their proprietary lease based on a notice of termination alleging an unauthorized sublet. After service of the lawsuit, the parties entered into a stipulation in which the Cooperative canceled the notice of termination, although it reserved the right to serve future notices in the event of future defaults distinct from those set forth in the canceled notice of termination. The stipulation did not mention attorneys’ fees.

The Cooperative then moved for summary judgment awarding it more than $40,000 in attorneys’ fees, based on the standard proprietary lease clause providing for such an award in litigation resulting from the tenant-shareholder’s breach of the lease. The tenant-shareholders opposed the Cooperative’s motion and cross-moved for an award of attorneys’ fees in their own favor pursuant to RPL 234, asserting that they, rather than the Cooperative, had prevailed in the underlying dispute because they had succeeded in canceling the notice of termination.

The court denied both sides’ motions and awarded no attorneys’ fees to anyone. It reasoned that the parties’ stipulation had resolved the substantive issues in the litigation by agreement, so neither side was a “prevailing party.” Given that the parties had voluntarily resolved their factual and legal disputes, the court declined to “adjudicate moot claims solely for the purpose of determining which side would have prevailed and would have become entitled to attorney’s fees.”